Institutional Setups of Monetary Policy and Banking Regulation and Supervision - A Survey

Worldwide reforms to the institutional setup of banking supervision in the af- termath of the global nancial crisis aimed not only at revising improving the of banking supervision, but also at introducing a macroprudential oversight of the - nancial system, empowering central banks with new nancial stability objectives and instruments. This survey investigates the interaction of monetary policy and banking regulation and supervision in the light of these new developments and what it may imply for the design of their institutional setup. The survey nds a con- sensus around an institutional framework where central banks are entrusted with nancial stability and macroprudential policy mandate, since this setup would take the most of the similarities between macroprudential and monetary policies. In such an institutional set up, the microprudential dimension of banking regulation and su- pervision should be assigned to an independent authority. Finally, the literature review highlights the need for empirical evidence and theoretical analysis, regarding the impact of di erent nancial supervisory architectures on social welfare, speci - cally the assessment of the bene ts and costs associated to each type of institutional arrangement.